The crisis of 1907 led to demands for an institution to keep out disruptions and panics. The economy during the last century caused severe economic turmoil caused by bank failures and bankruptcy of businesses. The creation of the Fed was caused by the numerous financial crises which afflicted the U.S. had been the sole major financial power that did not have a central bank. The Fed is comprised of twelve Regional Federal Reserve Banks that are each accountable for a distinct geographical region of the U.S.1 The Fed was established under the Federal Reserve Act, which President Woodrow Wilson signed on December 23, 1913, in reaction to the financial turmoil that occurred in 1907.23 Prior to this it was created, there was no central bank in the U.S. In the modern world, centrally located banks are generally accountable for making monetary policies and supervising their member banks. Understanding the Federal Reserve System (FRS)Ĭentral banks are financial institutions with privileged control over the distribution and production of money and credit to the nation or collection of countries. Twelve Federal Reserve banks have individual presidents, each representing a distinct district. The Fed has a board that comprises seven members. It was established to supply the nation with an efficient, safe, and secure financial and monetary system. It is the most effective financial institution around the globe. Sometimes, it is simply referred to as the Fed. The Federal Reserve System (FRS) is the central bank of the United States. Understanding The History Of America's Central Bank - The Federal Reserve
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